Waiver of Foreign Sovereign Immunity Clause
(Commercial Lease)

Summary

This waiver of foreign sovereign immunity clause may be used in a commercial lease when the tenant is a sovereign foreign nation or its agency or subdivision, such as a consulate, embassy, or diplomatic office. It clause contains practical guidance, optional clauses, and drafting notes. When the tenant in a commercial lease is a sovereign foreign nation or its political subdivision, agency, or instrumentality (a so-called foreign state), a waiver of sovereign immunity and any rights under the U.S. Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. § 1602 et seq., will typically be included in the lease agreement by the landlord. Foreign sovereign immunity is a legal doctrine that gives a foreign state the right not to be sued in the courts of the United States without its consent. The FSIA governs the doctrine of sovereign immunity and provides that a foreign state (as defined in 28 U.S.C. § 1603) is immune from the jurisdiction of the U.S. courts unless one of several statutorily defined exceptions applies. The FSIA thus provides the sole basis for obtaining jurisdiction over a foreign state in the United States. The most significant FSIA exception in the context of a commercial lease is the so-called commercial activity exception contained in 28 U.S.C. § 1605(a)(2). The commercial activity exception provides that a foreign state is not immune from the jurisdiction of courts in the U.S. when the suit is based on a commercial-activity carried out in the U.S. by the foreign state. See Argentine Republic v. Amerada Hess Shipping Corp., 109 S. Ct. 683 (1989) and Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480 (1983). If the conduct of the foreign state is similar to the type private entities normally use for business or commerce, courts have found that conduct constitutes commercial activity under 28 U.S.C. § 1603. See Republic of Argentina v. Weltover, Inc., 504 U.S. 607, (1992). A waiver of sovereign immunity clause is usually highly negotiated by the parties to a commercial lease. The clause below favors the landlord but contains drafting notes and optional clauses from both the landlord's and the tenant's perspectives. Defined terms used in this clause should be conformed to those used in the relevant lease. For further information on commercial leasing, see Industrial Leasing Resource Kit, Office Leasing Resource Kit, Restaurant Leasing Resource Kit, and Retail Leasing Resource Kit. See also Junior Associate Real Estate Resource Kit (Commercial Leasing).